Asia Pacific Equity Research 27 November 2025 This material is neither intended to be distributed to Mainland China investors nor to provide securities investment consultancy services within the territory of Mainland China. This material or any portion hereof may not be reprinted, sold or redistributed without the written consent of J.P. Morgan. China Property & Banks Vanke's bond extension - what are the implications? Jocelyn Gao (852) 2800-8529 jocelyn.gao@jpmorgan.com J.P. Morgan Securities (Asia Pacific ...

Core Viewpoint - Vanke's request for a bond extension has exposed severe cash flow issues, leading to a significant decline in its market position and raising concerns about the sustainability of the high-debt model in the real estate industry [1][2]. Group 1: Cash Flow Crisis - Vanke's cash flow has deteriorated, with only 300 billion available for use out of a reported 656 billion, as 60% of the cash is tied up in regulatory accounts [4]. - The company faces a debt repayment of 1,347 billion within a year, resulting in a cash shortfall exceeding 800 billion, necessitating a daily cash burn of 2.2 billion to maintain operations [4]. - Sales have plummeted by 44.6% year-on-year, with operating cash flow negative for three consecutive quarters, indicating a collapse of its previously successful business model [4]. Group 2: Survival Strategies - Vanke is selling assets to generate cash, having raised 68.6 billion from project sales in the first three quarters of 2025, including discounted sales of previously acquired prime properties [5]. - The company is negotiating with creditors for debt restructuring, potentially involving debt extensions and debt-to-equity swaps, with an upcoming bondholder meeting seen as critical [5]. - Vanke has shifted its focus from expansion to core urban residential projects, but the lack of quality buyers may lead to further losses from asset sales [5]. Group 3: Industry Implications - Vanke's situation reflects the end of the high-debt, high-turnover model in the real estate sector, as many companies struggle with similar issues [6]. - In 2025, 17 other real estate firms have already defaulted on debts, with a higher risk of bankruptcy due to their lack of substantial assets and government support [7]. - The government is unlikely to allow Vanke to fail due to its impact on housing delivery and supplier livelihoods, but it will not provide direct financial assistance [6]. Group 4: Human Impact - Ordinary individuals, such as homeowners and suppliers, are significantly affected, with concerns over delayed property deliveries and unpaid debts leading to financial distress [8]. - Vanke employees are also facing job cuts, with reports of a 30% reduction in some regional offices, highlighting the broader impact of the company's financial struggles [8].

【 摘要 】摩根资产管理李德辉认为，短期回调或不改长期投资机遇，A股整体仍处于一个健康的 上行通道中。摩根士丹利基金吴慧文指出，债券市场已从单边行情进入低利率、低波动、低利差 的震荡周期，进入"交易为王时代"。 图片 一、焦点锐评 图片 1．前10月工业企业利润同比增长1.9%，增速回落 11月27日，国家统计局公布的数据显示，1-10月份，规模以上工业企业利润同比增长1.9%，前 值增长3.2%。从三大门类看，1-10月份，采矿业下降27.8%，降幅较1-9月份收窄1.5个百分 点；制造业增长7.7%；电力、热力、燃气及水生产和供应业增长9.5%。10月份，受上年同期基 数有所抬高、财务费用增长较快等因素影响，规模以上工业企业利润同比下降5.5%。 【解读】中金公司张文朗团队认为，工业企业利润增速显著回落，利润下滑主要由营收收缩 （-3.3%）、费用率上升（+0.38个百分点）及投资收益骤降（10月其他损益降至201亿元，较9 月回落近60%）共同驱动。结构分化，采矿业利润降幅收窄，有色开采保持29.7%高增长，煤炭 与油气仍处下行；制造业全链条利润承压，上游与中游受投资收益与费用拖累显著，下游消费品 降幅 ...

Group 1: Open Market Operations - The central bank conducted a 7-day reverse repurchase operation of 301.3 billion yuan at a fixed rate of 1.40% on November 28, with a total bid amount of 301.3 billion yuan and a successful bid amount of 301.3 billion yuan. On the same day, 375 billion yuan of reverse repos matured, resulting in a net withdrawal of 73.7 billion yuan. The net withdrawal for the week reached 164.2 billion yuan [1][2]. Group 2: Liquidity Conditions - The interbank market liquidity remains ample, with the weighted average rate of DR001 dropping nearly 1 basis point to a low of 1.3%. Overnight quotes in the anonymous click (X-repo) system are maintained at 1.28%, with a supply scale close to 200 billion yuan. Prices for overnight funds secured by credit bonds have increased, currently reported around 1.55%-1.58%. Overall liquidity is stable despite some upward pressure on non-bank overnight funding rates due to month-end effects [3][4]. Group 3: Interbank Rates and Bonds - The latest one-year interbank certificates of deposit transactions are at 1.65%, unchanged from the previous day. Major interbank interest rate bonds have seen yields decline [8][10]. The main contracts for government bonds show mixed performance, with the 30-year contract up by 0.05%, the 10-year contract up by 0.03%, while the 5-year and 2-year contracts have decreased by 0.03% and 0.02%, respectively [12]. Group 4: Corporate and Regulatory Developments - The Central Committee of the Communist Party held a meeting on November 28 to review a comprehensive report on the situation of the 20th Central Inspection in provinces and municipalities. From January to October, state-owned enterprises reported total operating income of 6.8353 trillion yuan, a year-on-year increase of 0.9%, while total profits decreased by 3.0% to 342.144 billion yuan. The asset-liability ratio for state-owned enterprises rose by 0.4 percentage points to 65.2% by the end of October [13][14]. Group 5: Global Economic Insights - Japan's Ministry of Finance announced a revision to its bond issuance plan, increasing the issuance of 2-year and 5-year bonds by 300 billion yen each for the fiscal year 2025, raising the total bond issuance scale by 6.3 trillion yen [16]. In South Korea, government tax revenue from January to October reached 330.7 trillion won, a year-on-year increase of 12.6%, primarily driven by a rise in corporate tax revenue [17].

重仓万科，一步一步加仓到60%，感觉要爆雷了。连个20亿都拿不出来了。 flushz "我就不信XXXX政府会不管XXXX" "我就不相信深圳国资委会不管万科" 过去很多年，尤其是下跌的初期和中期，这种桥段是不是时常会看到？当然，今年被套的股 民少一些，网络上应该少见一点。 每当我听到或者看到股民发出这样的声音，都会有很强烈的不适感。我找不到合适的词来形 容，只能用不适感这个笼统的表达。觉得有点可怜？可悲？可笑？不一而足。 小飞鹰 举个例子，你只有5000元本金，一直加杠杆炒股，20年赚了5000万。然后继续上杠杆，最 后投资错误一把归零。还欠券商2000万。房地产公司其实也是一个模式。 红缨枪 房地产持续火了20多年，攒了20多年的家当，最后一算总账，原来这么大的家当，还不够用 来还债的。这还不光是万科，一个个的都这么个德性，开发商们统统都欠了很多很多钱。 我知道因为之前的房产调控政策，最后一波房子肯定是砸开发商手里了，东西卖不掉肯定会 让开发商亏钱，但之前这么多年卖掉的房子难道不是远远大于现在砸手上的房子吗？既然这 波房子卖不掉，就亏这么多钱，那之前卖掉那么多的房子，难道不是挣了更多钱才对？ 亏的是公司的 ...

Macro Economic Overview - Manufacturing and construction sectors show signs of low-level recovery, while the service sector is weakening, as indicated by the November PMI data [3][5] - The PMI for manufacturing increased by 0.3 percentage points to 50.0%, with improvements in new orders and export orders [3][4] - The construction PMI improved by 0.5 percentage points to 49.6%, supported by the acceleration of special bond issuance [5][6] Corporate Profit Trends - In the first ten months of 2025, the cumulative profit of large-scale industrial enterprises increased by 1.9% year-on-year, down from 3.2% [8][9] - October saw a significant decline in profits, with a year-on-year drop of 5.5%, attributed to a high base effect and rising costs [9][10] - The profit structure indicates a shift, with midstream profits increasing while upstream profits are declining [11][41] Investment Strategies - The report suggests early positioning for the upcoming spring market rally, with December being a crucial macroeconomic window [14][15] - Growth style is expected to continue, with a focus on technology and cyclical sectors [19][27] - The report highlights the potential of small-cap stocks, particularly in a liquidity-rich environment [18][22] Sector-Specific Insights - The real estate sector is seeing a shift towards infrastructure REITs, with a notable performance in affordable housing REITs [3][5] - The coal mining sector is experiencing price stability, with coal prices expected to remain firm [3][5] - The pharmaceutical sector is advancing rapidly in clinical trials for PD-1/VEGF dual antibodies, with four candidates entering registration trials [3][5] ETF and Index Performance - The report discusses the core investment value of the China Securities 2000 Enhanced Strategy ETF, emphasizing its growth potential and resilience [20][21] - The index is characterized by high growth and elasticity, particularly benefiting from liquidity easing and stimulus policies [21][22] Financial Engineering and Asset Allocation - The report recommends a multi-asset allocation strategy favoring short-term bonds, undervalued convertible bonds, and gold assets [55][56] - The bond market is expected to experience upward pressure on yields, with a shift in asset allocation from safe-haven assets to risk assets [43][48]

Report Industry Investment Rating No relevant content provided. Core View of the Report In the fourth week of November, the expectation of the Fed's interest rate cut increased, the risk appetite of the equity market recovered. The resonance of disturbances such as the stock - bond seesaw effect, concerns about the implementation of the fund fee rate new regulations, and the Vanke bond extension event led to an upward trend in most medium - and long - term yields, while the short - term yields remained stable due to loose funds. The yield curve showed a bearish steepening under the negative impacts such as the new fund regulations [8]. Summary by Directory I. Interest Rate Bond Market Review: The Yield Curve Shows a Bearish Steepening under the Negative Impacts such as the New Fund Regulations - **Overall situation**: In the fourth week of November, multiple factors such as the Fed's interest rate cut expectation, equity market risk preference, new fund regulations, and the Vanke event affected the bond market. The 1 - year Treasury bond active bond yield remained flat at 1.4%, the 10 - year Treasury bond active bond yield rose 1.65BP to 1.8290%, and the 30 - year Treasury bond rose 2.45BP to 2.1830%. The central bank net回笼 1642 billion yuan this week, the fund sentiment index was basically below 50, the funds were stable and loose, the issuance price of 1 - year national and state - owned bank certificates of deposit rose to 1.6525%, and the weighted price of DR007 rose to 1.4668% [5][8]. - **Daily performance**: - **Monday (November 24)**: The expectation of the Fed's interest rate cut drove the recovery of overseas risky assets, the equity market rebounded after hitting the bottom. The bond yields first declined and then rose, with a daily fluctuation of less than 0.5BP. The 7 - year Treasury bond performed well. The central bank's excess renewal of MLF led to a net injection of 100 billion yuan at the end of the day [2][8][11]. - **Tuesday (November 25)**: After the overnight China - US presidential call, the geopolitical influence eased, the risk preference of the equity market recovered, suppressing the bond market sentiment. Coupled with the new regulations on public fund sales, the bond yields generally rose. The short - term remained stable due to looser funds, while the medium - and long - term performed weakly [2][8][12]. - **Wednesday (November 26)**: The risk preference of the equity market remained high, suppressing the bond market performance. The new regulations on public fund sales, the Vanke event, and the expectation of the central bank's small - scale bond purchase impacted the bond market sentiment. The bond yields generally rose, with the short - term stable due to loose funds and the medium - and long - term weak [2][8][13]. - **Thursday (November 27)**: The funds were stable and loose. Boosted by consumer policies, the equity market opened high and moved high. Affected by the stock - bond seesaw, the Vanke extension, and the redemption of some products, the bond market sentiment was weak, and the long - term performance was significantly weaker than the short - term [2][8][14]. - **Friday (November 28)**: The funds tightened first and then loosened. Xinhua News Agency reported that the six major banks stopped selling five - year large - denomination certificates of deposit and lowered the interest rate of three - year products. Coupled with the weak fundamental expectation, it supported the bullish sentiment in the bond market. Most bond yields declined, and the medium - and long - term performed better than the short - term [2][8][16]. (1) Funding Situation: The Central Bank Conducted OMO with Net Withdrawal, and the Funds Were Stable and Loose The central bank's OMO had a net withdrawal this week, and the fund sentiment index was basically below or around 50, indicating that the funds were in a stable and loose state [5][8][19]. (2) Primary Issuance: The Net Financing of Local Bonds and Inter - Bank Certificates of Deposit Increased, while that of Treasury Bonds and Policy - Financial Bonds Decreased The net financing of local bonds and inter - bank certificates of deposit increased significantly, while the net financing of treasury bonds decreased slightly, and that of policy - financial bonds decreased marginally [25][28][29]. (3) Benchmark Changes: The Term Spreads of Treasury Bonds and China Development Bank Bonds Both Widened The short - term yields of treasury bonds rose 0.09BP, and those of China Development Bank bonds rose 0.55BP. The long - term yields of treasury bonds rose 2.46BP, and those of China Development Bank bonds rose 3.25BP. The 10Y - 1Y spread of treasury bonds widened 2.37BP to 43.95BP, and that of China Development Bank bonds widened 2.70BP to 34.94BP [18][30][38].

Investment Rating - The report maintains an "Overweight" rating for the real estate industry [4][5] Core Insights - The enthusiasm of real estate companies for land acquisition has decreased towards the end of the year, with the total land acquisition amount for the top 100 real estate companies from January to November reaching 847.8 billion yuan, a year-on-year increase of 14.1%, but the growth rate has significantly narrowed compared to the previous months [10] - The real estate market is experiencing a cooling trend, with new home sales in 30 cities for the week amounting to 1.875 million square meters, a month-on-month increase of 9.3% but a year-on-year decrease of 50.7% [22] - The report emphasizes that the real estate sector serves as an early economic indicator, and investing in real estate is akin to investing in the economic outlook [4] Summary by Sections Land Acquisition - Real estate companies' land acquisition enthusiasm has decreased, with the top 100 companies acquiring a total of 847.8 billion yuan from January to November, reflecting a year-on-year increase of 14.1% but a significant slowdown in growth [10] Market Review - The weekly performance of the Shenwan Real Estate Index showed a cumulative change of 0.7%, lagging behind the CSI 300 Index by 0.92 percentage points, ranking 24th among 31 Shenwan primary industries [11] New Home Sales Tracking - New home sales in 30 cities totaled 1.875 million square meters this week, with a month-on-month increase of 9.3% but a year-on-year decrease of 50.7% [22] - Year-to-date, the cumulative new home sales in these cities reached 87.808 million square meters, a year-on-year decrease of 11.3% [25] Secondary Home Sales Tracking - Secondary home sales in 14 sample cities totaled 2.015 million square meters this week, with a month-on-month decrease of 1.0% and a year-on-year decrease of 18.3% [30] - Year-to-date, the cumulative secondary home sales reached 94.579 million square meters, reflecting a year-on-year increase of 9.2% [30] Credit Bond Issuance - In the week of November 24-30, 21 credit bonds were issued by real estate companies, with a total issuance scale of 17.84 billion yuan, marking a week-on-week increase of 131.3% [40] - The net financing amount was 12.122 billion yuan, reflecting a week-on-week increase of 139.13% [40]

Investment Rating - The report maintains a "Positive" rating for the real estate and property management sectors [4][38]. Core Views - The report highlights two major opportunities: the rise of favorable policies for quality housing and the potential revaluation of consumer-oriented commercial real estate assets due to the current monetary easing cycle [4][38]. - It suggests that while the real estate market continues to stabilize, core cities are expected to recover sooner [4][38]. Industry Data Summary New Housing Transaction Volume - In the week of November 22-28, 2025, 34 key cities saw a total new housing transaction volume of 2.52 million square meters, a decrease of 1.7% week-on-week [6][9]. - Year-on-year, November transactions in these cities dropped by 35%, with first and second-tier cities down by 33.4% and third and fourth-tier cities down by 51.4% [9][10]. Second-hand Housing Transaction Volume - In the same week, 13 cities recorded a total second-hand housing transaction volume of 1.16 million square meters, an increase of 4.2% week-on-week [14][15]. - Year-to-date, the total transaction volume for second-hand housing is 5.37 million square meters, reflecting a year-on-year increase of 0.7% [14][15]. Inventory and Supply - In the week of November 22-28, 2025, 15 cities had a total of 1.37 million square meters of new housing launched, with a transaction volume of 1.03 million square meters, resulting in a transaction-to-launch ratio of 0.75 [24][30]. - The total available residential area in these cities was 89.846 million square meters, a 0.4% increase week-on-week [24][30]. Policy and News Tracking Real Estate Industry - The National Development and Reform Commission is promoting the expansion of REITs to include hotels and commercial offices [33][34]. - The China Securities Regulatory Commission has initiated a pilot program for commercial real estate REITs [33][35]. Company Announcements - New City Holdings successfully issued a private REIT with a scale of 616 million yuan [38][41]. - China Jinmao announced plans to sell 100% equity of its Sanya tourism business for 2.27 billion yuan [38][41].

Investment Rating - The report maintains a "Positive" rating for the real estate and property management sectors [5]. Core Viewpoints - The real estate market in China is expected to continue bottoming out, with core cities likely to stabilize sooner. Two major opportunities are highlighted: the elevation of housing policies and the strong performance of quality commercial enterprises during a monetary easing cycle, which may lead to a revaluation of consumer-oriented commercial real estate assets [5]. Industry Data Summary - **New Housing Transactions**: In the week of November 22-28, 2025, 34 key cities saw a total new housing transaction of 2.52 million square meters, a decrease of 1.7% week-on-week. Year-on-year, new housing transactions in November dropped by 35% [6][9]. - **Second-Hand Housing Transactions**: In the same week, 13 cities recorded a total of 1.16 million square meters in second-hand housing transactions, an increase of 4.2% week-on-week. Year-to-date, second-hand housing transactions have increased by 0.7% [14]. - **Inventory Levels**: As of November 28, 2025, the total available residential area in 15 cities was 89.846 million square meters, with a week-on-week increase of 0.4%. The average months of inventory depletion was 23.3 months, a slight decrease [25]. Policy and News Tracking - **REITs Development**: The National Development and Reform Commission is promoting the expansion of public REITs to include hotels and commercial offices. The China Securities Regulatory Commission has initiated a pilot for commercial real estate REITs [34][36]. - **Local Housing Policies**: Qingdao has introduced housing subsidies for talent, offering up to 300,000 yuan for doctoral graduates. Fuzhou plans to provide subsidies for families with multiple children, while Beijing's "14th Five-Year Plan" emphasizes improving the housing supply system [34][35]. - **Land Market Activity**: In Shanghai, nine land parcels were sold for a total of 17.33 billion yuan, while Wuhan's land sales totaled approximately 3.97 billion yuan [34][39]. Company Dynamics - **New City Holdings**: Successfully issued private REITs with a scale of 616 million yuan, backed by the Wuyue Plaza asset [5]. - **Vanke**: Engaged in discussions regarding the extension of a bond due on December 15, 2025, with a remaining balance of 2 billion yuan [5][41]. - **China Jinmao**: Announced plans to sell 100% equity in Jinmao (Sanya) Tourism Co., Ltd. for 2.27 billion yuan [5][43].